Uniswap (UNI) price has declined significantly in the past few days. Despite noting a good run towards the beginning of the month, corrections came through, and the altcoin’s value declined. From a technical perspective, the recent price declines are set to extend as price action has formed a bearish reversal pattern.
Uniswap price has declined by more than 15% in the last seven days and is likely set to post further declines. Recent hits were absorbed by the bulls who had been betting on a price rise, which failed at UNI and fell through the support of $6.00.
As a result, the traders who had been holding out their long contracts saw liquidations coming up to more than $2.2 million. In comparison, the traders that had opened short contracts noted only $87,000 worth of liquidations. This means that the bulls observed 25 times higher liquidations than the bears in the span of a week.
This difference will likely expand, and the long liquidations will increase as Uniswap price is set to decline further over the coming days.
Uniswap price trading at $5.74 has nearly validated the bearish reversal pattern of Head and Shoulders (H&S). This pattern would be confirmed once UNI successfully forms consistent lows below the neckline marked at $5.81.
The head and shoulders pattern is a trend reversal. It consists of three peaks: a higher peak (head) marked at $7.81 and two lower peaks (shoulders). The first shoulder is formed as an uptrend, followed by a higher peak forming the head, and then a lower peak completing the second shoulder.
The pattern suggests a shift from bullish to bearish sentiment, with a neckline connecting the lows. A confirmed break below the neckline indicates a potential downtrend. This is yet to occur since the daily candlestick has not closed below the neckline as of now.
Once it does, the altcoin will likely set on a path that could lead to a 34% crash, bringing the price down to $3.81. This is the target price marked as per the bearish reversal pattern.
UNI/USD 1-day chart
However, if the bearish cues turn bullish, Uniswap price would have a shot at reversal, provided it can reclaim $6.31 into a support floor. This would invalidate the bearish pattern and likely send UNI beyond $6.50.